SEKISUI JUSHI CORPORATION

The Group manufactures and sells products for public works projects, and its performance may be affected by significant reductions in public investment due to national or local government policy, or by delays in budget execution caused by shortages of materials or engineers. As a risk mitigation measure, the Group operates across two segments, the Public Sector and the Private Sector, but dependence of public investment on policy cannot be completely eliminated.

There is a risk that cost increases resulting from market fluctuations in the prices of petrochemical products, steel, and other raw materials, or from changes in the geopolitical situation, cannot be passed on to product prices in a timely manner. In addition, if procurement delays occur due to a sudden difficulty in obtaining raw materials, this may adversely affect production activities as well as business results and financial condition. The Group addresses this by focusing on strategic purchasing and stable procurement.

Overseas business activities are exposed to a wide range of risks, including exchange rate fluctuations, changes in tariff rates, unexpected revisions to laws and regulations, social and political unrest, terrorism and international conflicts, and the outbreak of epidemic diseases. Although the Group takes measures such as utilizing forward exchange contracts, gathering information on local culture and legal systems, and ensuring employee safety, if these risks are not adequately addressed, business results and financial condition may be affected.

The Group promotes the acquisition of intellectual property rights such as patents and conducts prior investigations to avoid infringing on the rights of third parties. However, if unforeseen intellectual property litigation or disputes arise and a judgment unfavorable to the Group is rendered, this could have a material impact on business results and financial condition.

Unexpected defects in products may result in product recalls or claims for damages. Although the Group carries insurance to prepare for such compensation, if a situation arises that cannot be covered by insurance, business results and financial condition may be affected. The Group strives to reduce this risk by thoroughly addressing safety and quality considerations at the product development and production stages.

If business sites suffer significant damage due to large-scale earthquakes, storms or other natural disasters, fire accidents, or infectious diseases, this may result in lost business opportunities due to the suspension of business activities, compensation to customers, and loss of social trust. The Group strives to manage these risks through the formulation of crisis management manuals, disaster prevention drills, infection prevention measures, and the purchase of casualty insurance, but there is no guarantee that the impact can be completely prevented.

If computer viruses or cyberattacks result in the leakage of personal information or trade secrets, or cause serious failures in system networks, this may result in compensation for information leaks, loss of social trust, and lost business opportunities due to interruption of operations. The Group implements an organizational management framework based on its "Basic Policy on Information Security," enhances security, and conducts regular maintenance inspections and employee training, but complete prevention cannot be guaranteed.

M&A is positioned as an important means of growth strategy, but there is a risk that expected synergies or business expansion effects may not be achieved due to unexpected contingent liabilities arising after an acquisition or changes in the business environment. In addition, delays in adjustment due to differences in management policy or corporate culture during integration work, loss of talent, and decline in employee motivation may adversely affect profitability, and impairment losses may also occur. The Group seeks to reduce this risk through the implementation of due diligence and careful decision-making by the Board of Directors, including outside directors.